Critics who are sceptical about the official GDP data and have repeatedly pointed to a divergence between the numbers and the ground reality are like “the five blind men describing an elephant,” says the country’s Chief Statistician TCA Anant.
Invoking the earthy metaphor to suggest that experts who work in insular information silos will find the totality of truth elusive, Anant dismissed the claims of divergence between the Index of Industrial Production (IIP) and the manufacturing sector estimates of GDP.
“There is no inconsistency of the variety being talked about,” he told BusinessLine .
His comments come after a string of recent reports questioning the “methodological” grounding of the new GDP data series. Among other entities, the US Bureau of Economic and Business Affairs, and private and government analysts have expressed doubts about the data.
“India is ostensibly one of the fastest-growing countries in the world, but the depressed investor sentiment suggests the approximately 7.5 per cent growth rate may be overstated,” says the ‘Investment Climate Statements for 2016’ report.
Challenging these analyses, Anant said: “GDP does not talk about any specific event. It does not talk about credit or exports, though they are all components of GDP measurement. If we look at individual items, we will get different pictures… Conceptually, it would be incomplete and incorrect without a complete model for analysts to pick up partial pictures and say that this is the reality.”
To put to rest doubts over the veracity of the new series of national accounts, the government will shortly unveil a “back series” that will provide comparable data on GDP growth in the past.
“It is a research exercise… we will be completing it soon,” Anant said, emphatically backing the methodology and estimates of GDP growth under the new series. The CSO believes the current GDP methodology is better than the previous series, but concedes that there could perhaps have been greater clarity on the GDP deflator. But that would not be possible without more concrete data.
The Parliamentary Standing Committee on Finance had in its report in April asked the Ministry of Statistics and Programme Implementation (MoSPI) to constitute a high-level committee of economists to review the methodology for computing the new GDP series.
Unveiled by the MoSPI in January 2015, the new series of national accounts with a base year of 2011-12 led to questions over the divergence between IIP data and and the robust manufacturing numbers in the GDP data.
In March 2015, R Nagaraj, a professor at the Indira Gandhi Institute of Development Research who was also a non-official member of a CSO Sub-Committee, had expressed reservations about the new numbers. “GDP growth rate cannot be seen in isolation from other macroeconomic numbers, and it does not seem to gel with reality,” Nagaraj said, but declined to elaborate.
The MoSPI had at the time sent a detailed clarification.
The Chief Statistician’s latest assertion is unlikely to quell the lingering scepticism. It remains to be seen whether the “back series” data that the government has promised can do that job.